Types of Fire Insurance Policies in India

Fire accidents can result in significant financial losses, so it is essential to protect your property with a fire policy. In India, various fire insurance policies are available to meet your specific needs. Each policy type offers distinct features and coverage benefits. Property owners must know the coverage options of a fire policy to make the right choice.

Let us explore the different types of fire insurance policies available in India.

Types of Fire Policies in India

Two comprehensive fire insurance policies tailored for businesses of varying sizes available in India are Business Guard Sookshma Package Policy and the Business Guard Laghu Package Policy. These provide financial protection against fire and related perils, to business continuity and asset security.

1. Business Guard Sookshma Package Policy

The Business Guard Sookshma Package Policy is specifically crafted for small enterprises with assets valued up to ₹5 Crores at a single location. This policy offers coverage against a range of unforeseen events, including fire, natural disasters, impact damage, riots, strikes, and structural damage that are beyond the control of the insured. It protects from physical loss, damage, or destruction of the insured property due to these perils.

Key Features:

• Comprehensive Coverage: Protection against fire, lightning, explosions, implosions, and other specified perils.
• In-Built Covers: It includes expenses such as professional fees for architects, surveyors, consulting engineers, debris removal, and temporary removal of stock.
• Simplified Claim Process: It has a simple claim procedure that allows you to track claim status online.
• Suitable for Various Small Businesses: It is ideal for entities like kirana stores, small workshops, and other small-scale enterprises.

2. Business Guard Laghu Package Policy

The Business Guard Laghu Package Policy is designed for medium-sized businesses. It caters to enterprises with assets valued between ₹5 Crores and ₹50 Crores at a single location. This policy, along with a burglary insurance add-on provides financial assistance in the event of damage to the insured property due to fires, natural disasters, and burglary.

Key Features:

• Extensive Coverage: It covers several risks, such as fire, natural calamities, and burglary.
• In-Built Covers: It is similar to the Sookshma Policy. It includes coverage for professional fees, debris removal, and other ancillary expenses.
• Additional Flexibility: It offers options like floater cover for stocks at multiple locations, declaration policy for stocks, and an escalation clause for automatic increase in the sum insured during the policy period.
• Ideal for Medium-Sized Enterprises: It is suitable for businesses such as shopping malls, medium-scale manufacturing units, and other enterprises with significant asset bases.

Common Inclusions and Exclusions

Inclusions:

• Protection against fire, lightning, explosions, implosions, and other specified perils.
• Covers the cost of damages due to natural disasters like storms, floods, and earthquakes.
• In-built covers for professional fees, debris removal, and temporary removal of stock.

Exclusions:

• Losses resulting from deliberate, willful, or intentional acts by the insured or their representatives.
• Damage to electronic equipment due to specific causes like over-running, excessive pressure, short-circuiting, arcing, self-heating, or electricity leakage.
• Losses incurred due to spoilage resulting from the interruption or cessation of any process caused by an insured event.
• Losses occurring when the insured premises remain unoccupied for more than 30 days without receiving any written approval from the insurance provider in advance.

Top 6 Fire Policy Options in India for Non-Fixed Assets

• Valued Policy: This policy covers property for a pre-agreed value, regardless of its market price at the time of loss.
• Average Policy: Under this policy, if the property is underinsured, the insurer pays only a proportionate claim amount.
• Comprehensive Policy: A comprehensive fire policy with burglary insurance add-on provides extensive coverage for damages due to fire, theft, and natural disasters.
• Floating Policy: It is ideal for businesses with movable goods. This policy covers multiple locations under one sum insured.
• Replacement Policy: This policy covers the cost to replace the damaged goods and property with new items of similar kind and quality.
• Specific Policy: It provides coverage for a specific property or asset for a fixed sum, irrespective of its total value.

Importance of Choosing the Right Fire Policy

Selecting the right fire insurance policy from a reliable provider like TATA AIG helps you protect your property, stock, or valuable items. You may need a comprehensive policy to cover multiple risks or a valued policy to secure irreplaceable assets.

Some may prefer floating fire insurance policies for multiple locations, while others may choose replacement policies to ensure they can quickly restore damaged goods or machinery.

Retail store owners or warehouse keepers may combine fire policy with burglary insurance coverage for dual protection against fire and theft losses.

Conclusion

Fire accidents can happen unexpectedly. Being financially prepared with the right fire insurance policy helps reduce stress and avoid heavy losses.

Each policy has its purpose and benefits. Assess the risk exposure to your property and your financial goals before choosing a fire policy. If you want extensive coverage, it is better to add burglary insurance for complete peace of mind.